SPY Trends and Influencers December 24, 2011

Last week’s review of the macro market indicators looked with the last two weeks of the year upon us and the Holidays lighter volume and less interest. Moves can get exaggerated in this environment. Gold ($GLD) still looked broken from its move and poised for more downside while Crude Oil ($USO) was also broken and biased lower. US Treasuries ($TLT) and the US Dollar ($UUP) looked to continue to drive the direction of the markets crushing Equities as they move higher. The Shanghai Composite ($SSEC), which has been playing a supporting role in moving Equities lower, looks to continue to do so long term but might consolidate the last leg down in the short run first. Emerging Markets ($EEM) looked to pay the price lower as well. Volatility ($VIX) was poised to continue to drift lower supporting an orderly move. All this set up for the Equity Index ETF’s, $SPY, $IWM and $QQQ, to move lower in the coming week, and the short term charts agree. Use this information as you prepare for the coming week and trade’m well.

Gold hung tough consolidating the move lower while Crude Oil found a bottom and started higher. The US Dollar Index consolidated its move in a bull flag while Treasuries jumped Monday but met resistance and trailed lower the rest of the week. The Shanghai Composite did consolidate sideways while Emerging Markets found a bottom Monday and have moved higher. Volatility drifted lower as anticipated. The combination of a consolidating US Dollar, falling Treasuries and lower Volatility allowed the Equity Index ETF’s SPY, IWM and QQQ to find support and move higher, with the SPY having the strongest move followed by the IWM and the QQQ bringing up the rear. How does this impact the view for the week ahead? Let’s look at some charts.

As always you can see details of individual charts and more on my StockTwits feed and on chartly.)

SPY Daily, $SPY

SPY Weekly, $SPY

The SPY started the week with a Bullish Kicker pattern and continued higher through the rest of the week, peeking above the downtrend resistance. Friday’s candle with virtually no upper shadow was a strong end to the week, but is clouded a bit by the falling volume on the rise, and yes I know it was a Holiday week. The RSI agrees with price, rising and bullish as does the MACD that is growing more positive. The weekly chart shows the move higher off of the touch of the Fibonacci Arc, ending above all of the SMA on both timeframes. The RSI on the weekly chart continues to run just under a move to bullish though while the MACD is positive and moving sideways. Thus far a move higher within the broad consolidation range. But the cross of the downtrend resistance makes you pay notice. Resistance comes higher at 128.00 and a move above that turning the neutral intermediate term trend bullish with resistance at 131.10 and 135.80. Support lower comes at 124.50 followed by 120. A move below 120 would move that trend to bearish in the intermediate with support lower at 118.50 and 115.50. Short Term Higher in a Broad Range.

The last week of the year begins with Gold consolidating but looking to move lower while Crude Oil may consolidate also but is biased to move higher. The US Dollar Index looks to continue higher while US Treasuries consolidate their loses above support. The Shanghai Composite looks to consolidate further within the downtrend while Emerging Markets ride a short term wave higher within their downtrend. Volatility is poised to continue lower. The influencers of the Equity Index ETF’s are mixed but biased to support Equities moving lower. This is in conflict with the short term view in the charts of SPY, IWM and QQQ which look higher within a a broad consolidation range, perhaps signaling a topping. The US Dollar Index joining Treasuries lower will help the rally in equities continue. But a reversal high in Treasuries, joining the Dollar Index, could turn that consolidation range into a move lower. The strongest of the Equity Indexes is the SPY followed by the IWM and the weakest the QQQ. Use this information as you prepare for the coming week and trade’m well.

You can view the Full Version with 20 detailed charts and analysis free this week: Macro Week in Review/Preview December 24, 2011 for free this week. Merry Christmas!

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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